Thoughts, news and views on politics, economics, business and development in Southeast Asia

Monday, March 8, 2010

Australia-Indonesia relations need to be reinvigorated

With Indonesian President Susilo Bambang Yudhoyono visiting Australia this week, lots of ink will be spilt about the need to improve relations between the countries.

But there will probably not be many more incisive and critical analyses of the relationship between Australia and Indonesia than that penned by Fergus Hanson of the Lowy Institute, a Sydney-based think tank.

While Australian Prime Minister Kevin Rudd is busy holding conferences on the supposed need for yet another Asia-Pacific multi-lateral institution, Hanson argues that relations with Indonesia, which should theoretically be a key partner for Australia in Asia, have plateaued.

While government-to-government ties have been getting stronger, Hanson points out that these are focused around a mostly negative set of security-related issues, such as counter-terrorism, illegal fishing, people smuggling, bird flu, climate change and interfaith dialogue (i.e. soft counter-terrorism).

He also argues that business links are underdeveloped, with Australia's two-way trade with Indonesia, a market of 230m people, only half the size of its two-way trade with New Zealand, which has less than 2 percent of Indonesia's population and a fifth of its GDP.

"Mutual public distrust and stereotypes are so entrenched that dramatic leadership gestures are needed to produce a step-increase in relations," Hanson writes.

He proposes a number of ways to move things forward, which you can read in his full paper, online here.